[300316,EN.BIZ] European Shippers Seek Ban On Publishing Rate Hikes Ahead Of Time

THE European Shippers' Council (ESC) has appealed to European competition commissioner Margaret Vestige to forbid container carriers from posting rates publicly to stop them seeing each others increases in order to amend their own.

The European Commission, the governing body of the European Union, recently reached an agreement with 15 lines to improve the transparency of pricing information, reports London's Logistics Manager.

But the ESC said that even with the new proposed framework "this practice is unfair to customers in an industry, which is already subject to a significant concentration move and benefiting from exemption to competition legislation," it said in a letter to the commissioner.

"Liners could continue testing the consequences of the published tariffs as they did in the past," said the ESC letter.

"The effect could be an unfounded increase in maritime freight costs as they might be unable to counter the market force of the shipping companies. Larger companies might be impacted as well when the present overcapacity of the market will have been reduced."

The ESC pointed out that such a system applies only to containers in maritime shipping.

"The ESC is asking the commissioner not to add further exemption to the present regulation of the sector and to completely abolish any present or proposed form of public communication of prices".

"For that reason, ESC remains concerned that the practice may enable the parties to test their new price policy without incurring the risk of losing customers," the letter said.

"They can also monitor whether or not they can reasonably implement this price increase. At the same time, they are able to reduce strategic uncertainty and reduce the risk for losing competitiveness in the market."

Moreover, the current block exemption still allowed for technical co-ordination between companies, the ESC said. This could lead to further concentration in the market through alliance partnerships that allowed carriers to adjust their capacity and service level.

The ESC said testimony from member companies showed that average rates paid were well below rates published in GRI announcements.

"Given that, GRIs [general rate increases] can be seen as a tool for the parties to collectively pump up the prices," the letter said. "Especially, small enterprises could be the victim of this practice. Nowadays, in fact, GRIs give an indication and a future point of reference for bargaining between the contractual parties."

Source : HKSG.